Finding the right Shared Ownership mortgage

Buying a home is likely to be the biggest financial commitment you’ll ever make, so you want to be sure that you know and understand the process to the best of your ability.

With over 15 years of experience arranging Shared Ownership mortgages, we here at Share to Buy have taken a look at some of the most commonly asked questions by first time buyers who are looking to get a mortgage.

How does a Shared Ownership mortgage work?

Shared Ownership is a part buy/part rent scheme which allows you to purchase a share in a property, usually between 25-75%. Typically, you will require a deposit of just 5% of the share you’re buying (not of the full value of the property), paying a mortgage on the share you own and a below-market-level rent on the remainder.

While not all mortgage lenders will lend on Shared Ownership properties, a considerable number will. There can, however, be considerable differences in the deposits required, depending on whether the property being purchased is a new build or resale, a flat or a house. You can use our mortgage picker to see which mortgage schemes might be available to you for a property that you may be considering.

Do I need to find a property before I arrange a mortgage?

Unlike the open market, with Shared Ownership you will need to have found a property and, if a brand-new property, had a financial interview to establish the share that you should purchase. Without knowing the share, and thus the rent, as well as the service charge, it is not possible to calculate the amount that you can actually obtain on a mortgage.

How do I find out which mortgage deals are available?

You can use the Share to Buy mortgage picker to find a suitable Shared Ownership mortgage. This will show you the schemes which you should be able to consider, subject to affordability calculations. These calculations we can do for you, if you click on ‘apply’ and submit an agreement in principle application.

How much can I borrow for a mortgage? 4 times my income? 4.5 times, or would a lender stretch to 5 times?

Sadly, apart from the Bank of England, no lending institution still uses a multiple of income to provide the answer. All lenders now use affordability calculators and credit scoring to provide the maximum loan amount.

How can I find my credit score?

Credit reference agencies can provide you with a credit score but each mortgage lender will have compiled their own method of scoring and will never agree to divulge this. It will not generally be the same as that provided by the credit agencies.

If I provide all my details to a mortgage lender, will the amount they offer be the same as other lenders?

There can be quite a considerable difference in the amount offered between lenders. Sometimes this can be due to how they treat items such as overtime or bonuses, in other cases the calculations will be swayed by their credit scoring.

Is it possible to get any idea how much I can borrow?

You can do this on Share to Buy’s affordability calculator which can give you an indication as to whether a mortgage amount is likely to be considered affordable by mortgage lenders. Our calculator is even based on real-time results obtained from a range of mortgage lenders own calculators!

For more information on the process, you can also check out our mortgage guide.